The marginal private benefit (MPB) a firm receives for each of up to 8 tons of pollution is given in the table. It does not incur any marginal cost for any ton it emits, and rationally chooses how many of these 8 tons to emit. Each ton emitted imposes a societal cost of $59. MPB of each possible ton of pollution. Q 1 2 3 4 5 6 7 8 MPB $75 $62 $38 $18 $3 $0 $0 $0 Assume a perfectly competitive market for tradable pollution permits, where each permit allows a firm to emit one ton of pollution. The firm currently has 5 pollution permits. If the market price for a pollution permit is $12.50, how many tons does the firm emit? Round to two decimal places and do not enter the currency symbol. If your answer is $1.125, enter 1.13. 21
The marginal private benefit (MPB) a firm receives for each of up to 8 tons of pollution is given in the table. It does not incur any marginal cost for any ton it emits, and rationally chooses how many of these 8 tons to emit. Each ton emitted imposes a societal cost of $59. MPB of each possible ton of pollution. Q 1 2 3 4 5 6 7 8 MPB $75 $62 $38 $18 $3 $0 $0 $0 Assume a perfectly competitive market for tradable pollution permits, where each permit allows a firm to emit one ton of pollution. The firm currently has 5 pollution permits. If the market price for a pollution permit is $12.50, how many tons does the firm emit? Round to two decimal places and do not enter the currency symbol. If your answer is $1.125, enter 1.13. 21
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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